Experience Matters

What if we had a regular innovation report similar to the daily farm report. For those of you without an agricultural background (which is most everyone these days) every day before they headed out to the fields to work, farmers would listen to the farm report on the radio. This would provide all of the farmers with the information they needed to make decisions for the days tasks including detailed weather reports, changes in grain futures, etc. What is the equivalent for companies seeking to innovation?

This question came up while I was attending the seventh annual Innovation Journalism Conference at Stanford University. The journalists there reporting on innovations focus more on the fruits of the harvest (new iPhone 4.0!) rather than the hard work that goes into enabling that harvest. Innovation Process reporting is difficult to do but something that teaches more about why the future is not as evenly distributed as we might expect. Then it hit me, is there an opportunity to create the high-tech version of the farm report to help those struggling to innovate?

You could imagine a a regular report that provides firms with such information, from around the global market place on such topics as…

Foreign Exchange rates

Demographic Trends

Customer sentiment trends

Patent scorecards of number and categories of published inventions

Changes in tax rates

etc.

So what do you think? Is this something we could use? What other elements are important to include? What frequency would you want this type of information?

Was meeting with a fascinating entrepreneur today, the details of which I cannot share because it’s too soon and too cool! But one of the defining aspects of his enterprise architecture is the strong offering network. Rather than maximizing the business returns, he’s focused on maximizing the network’s financial returns, so that everyone that participates wins. He’s leveraging a notion I’ve been advocating for a while, strengthening market positions by building loyal and strong offering networks. These strong offering networks, in which each node provides solutions to the needs of other nodes within the network while it’s own needs are met by solutions offering by other network members, are more robust in competitive markets. One example of this today is how Apple handles the revenue sharing with the App Store for the iPod Touch and the iPhone. By giving most of the application sales revenue back to the developers, Apple has attracted a sizable population of developers churning out a cornucopia of experiences that serve both to extend the hold Apple has on it’s users and attracting more developer talent to create for this market. Apple strategy is in direct conflict with classic retail channel management where the retailer’s margin demands most of the time leave little of the consumer sales revenue in the hands of the original developer of the consumer experience.

Why don’t more companies, big and small, embrace the creation of strong offering networks? It’s a difficult play to execute. Many times you sacrifce short term financial gains for longer term market position and competitive advantage, two business attributes that are difficult to model with current accounting practices with any certainty. Crafting strong offering networks also requires the other nodes in your network to want to play by the same long term rules focused on mutual benefit. The advantages of such an approach are significant, especially if you are the first to set up such a structure in your market. Once your success is know, your competitors will be rushing and struggling the learn the rules of the new game in town. Think about anyone else that sets up an App Store for their device or network. They have to, at a minimum, meet the same juicy terms for developers or exceed the experience offered by Apple, a difficult task indeed.

So it’s up to you, the leader, to decide if you want to continue the classic Divide and Conquer approaches to market dynamics or embrace the potential of Share and Conquer!

Just finished listening to a panel on the education at the AlwaysOn & STVP Summit at Stanford. The panelists were fantastic and really outline some incredible opportunities in the education space, especially under the Obama Administration.
James Shelton, the Assistant Deputy Secretary of Innovation and Improvement, US Dept of Education, had three opportunities he sees in the coming years.
1. Data systems & platforms that leverage cloud computing that require no infrastructure at the local level.
2. Unprecedented level of data will be available in schools, they need tools to understand and make sense of the data.
3. Providing access to rigorous courses to students that do not have local access. (AP in rural or Urban environments)

All of this has me personally very excited about the opportunities to improve both the quality and access of education in the United States. There is a hitch though that the panel did not explore…

As we look at the push to measure and analyze teacher and student performance we have to remember the key finding of Sutton and Pfeffer’s The Knowing-Doing Gap, organizations tend to encourage the behavior that they measure, or as sometimes related by Prof Sutton, “Be careful what you measure, you just might get it!” This is especially pertinent for K-12 education. Most assessments tend to focus on things that are easy to assess, testing facts, close ended problems, and route memorization. Unfortunately these skills do not make America’s youth competitive in the global knowledge economy, especially when most any fact you’d desire to know is instantly accessible on the Internet via the new Oracles at Delphi, Google, wikipedia and the like. In this future that is dawning faster than our education system can adapt, the skills we need to be developing and assessing in our students have to do more with open ended problem solving, creativity, and team work. The three R’s are meant to be a foundation of education, not the whole house! The challenge is that these necessary skills are more difficult to assess. It’s harder to have a cram session on creativity or team building. These are skills that are developed over time and practice.

Not to be one that tosses out a problem without potential solutions, I do see a few potential opportunities to both develop and measure these critical future facing skills our youth need to compete in the global economy.

Creative design contest such as those organized by US FIRST (www.usfirst.org) provide the experiences students need to both develop and demonstrate these skills. FIRST can be expensive to participate in given the heavy hardware and corresponding travel aspects of the contest. Online communities offer new possibilities of building and engaging student teams in shared creative endeavors . Old (old because they were around while I was in school) organizations such as Creative Problem Solving or Bucky Fuller’s World Game, seek to engage students in the development of systems thinking and open-ended problem solving skills. Both of these experiences could be virtualized in such a way as to scale the engagements to cover the entire nation.

In short, we need to prepare our children with the skills the need to participate in tomorrow’s dreams, not yesterday’s reality. I would hope that the government and the rising class of education entrepreneurs would take up and drive new solutions into the market to develop, demonstrate, and measure these more complex thinking skills for our future leaders.

Went with my family to the California Railroad Museum in Sacramento a few weekends ago. If you haven’t gone, it is worth the trip. It’s an incredible collection with a knowledgeable and passionate staff, and a large toy train area for younger children.

Exploring the history and evolution of the railroad in California had several pertinent lessons on innovation. For instance, I learned a civil engineer, Theodore Judah, had the vision and audacity to suggest a transcontinental railroad.

Judah had the sense of mind to gather around him several wealthy financiers to help bring his dream to birth. Leland Stanford was one backer of Judah’s crazy dream. Though Judah died before the railroads met on 10 May 1869, his vision drove huge changes in the economic, social, and technical landscape of America.

“Gee John, that’s an interesting bit of trivia. But, what does this have to do with endurance? Come on, Judah died of yellow fever…”

In the early days of the railroad every local community and railroad company set their own standards of operation, including the track gauge cars rode on. This was incredibly important to the market and supply chain.

Typically cars from one gauge could not run on another gauge of track. [Gauge is the distance between the railroad track rails] This meant that as railroads expanded and eventually met other railroads, there was a good chance their gauge was incompatible. This required laborers to shift cargo from the cars on one railroad to another. It inserted delays in shipping, increased threat of theft and breakage, and required most rail transit to act like the first dot matrix printers – returning to the start before shipping something out.

Eventually, the cost of maintaining separate rail ecosystems exceeded the benefit. As a result there was tremendous consolidation in standards. A few standards emerged, but there were many losers. This resulted in huge losses by railroad builders but led to a tremendous growth in innovation resulting in a standardized, stable rail platform. We still use that platform today to ship most freight in the United States.

Winning the standardization race is a long term strategy for companies training for the innovation marathon. Firms that treat this as a sprint will not reach the finish line. The question to ask yourself is: based on your offering and the target market, what kind of race are you running, and are you training to win or just to finish.